Senators To DeVos On TEACH Grant Debacle: 'Urgent That These Mistakes Are Fixed'

The U.S. Department of Education is in the midst of a top-to-bottom review of a troubled federal grant program for public school teachers. The effort follows reporting by NPR that found many teachers had their grants unfairly converted to loans, leaving some with more than $20,000 in debt. In June, 19 U.S. senators signed a letter to Education Secretary Betsy DeVos, citing NPR's reporting and saying "it is urgent that these mistakes are fixed."

Now, documents obtained by NPR reveal that a previously unreported plan to fix the program was problematic from the start and did nothing for the vast majority of people involved.

Education experts say the department should learn from these mistakes as it works to reform the program. They say the program serves a vital purpose but it has been plagued by implementation problems that have left many teachers with debts they shouldn't have to pay.

The Teacher Education Assistance for College and Higher Education grant program helps prospective teachers pay for college or a master's degree. In return, they promise to teach a high-need subject for four years in a school that serves low-income families. The program began in 2008, but it has been poorly managed from the beginning.

Now it's clear that there were multiple warning signs along the way.

In late 2014, the Government Accountability Office completed a review of the TEACH grant program, finding that more than 2,200 recipients had their grants converted to loans "in error."

The Education Department then ordered its own massive audit of borrower records. That review found nearly five times more people — 10,776 recipients — appeared to have had their grants converted as a result of errors made by the company hired to manage the program.

In early 2015, the Education Department ordered a second company, FedLoan Servicing, to make this right for the people who had their grants wrongly converted. FedLoan had recently taken over management of the TEACH grant program from a company owned by Xerox. In a memo obtained by Public Citizen, a consumer advocacy group, the department wrote to FedLoan:

"There is a population of TEACH Grant recipients where Xerox incorrectly converted their TEACH Grants to loans. The recipients suspected to have had their TEACH Grants incorrectly converted ... should be contacted and provided the option to have their loan converted back to a grant."

But it's never been clear if FedLoan actually did that. It's clear that thousands of people got hurt, but "it's been a mystery how many individuals had their grants converted back after this audit," says Julie Murray, an attorney at Public Citizen Litigation Group.

In short, did the Education Department ever fix this? What happened to these more than 10,000 people?

In June, 19 U.S. senators sent a letter to DeVos, complaining that, several years after this directive to FedLoan, "it is unclear whether any of these erroneous conversions have since been corrected, but it is urgent that these mistakes are fixed."

NPR has now learned what happened with this effort to help those 10,776 people — and it's not pretty.

The vast majority received no help at all.

The Education Department confirms that just 15 percent — 1,671 recipients — had their loans changed back to grants.

"Those numbers to me sound appalling," says Murray, who reviewed previously unreported documents obtained by NPR that detail this flawed outreach program. "I think it would be hard to design an outreach plan more likely to fail at fixing these errors," she says. "It doesn't appear that the department undertook a really serious effort to reconvert these grants back."

According to these documents, FedLoan and the Department of Education chose not to automatically reconvert any of these loans. They saidthey wanted to be certain each conversion was indeed erroneous, fearful of restoring a grant to someone who no longer met the TEACH grant requirements.

Instead, FedLoan mailed one letter to most of the borrowers in this target group. NPR has obtained a copy of the letter. Rather than clearly alerting people that their grants may have been converted by mistake or in error, or that they might be owed thousands of dollars, the letter is titled, "INFORMATION ABOUT YOUR TEACH GRANTS THAT WERE CONVERTED TO DIRECT UNSUBSIDIZED LOANS."

The letter begins:

"Recently, we asked our TEACH Grant Servicer, FedLoan Servicing, to perform a quality review of TEACH Grants that were converted to loans to determine if the conversions were consistent with the program requirements outlined in the Agreement to Serve (ATS) that you signed before you received your TEACH Grants. Through this review, we learned that your TEACH Grants may have been converted to loans prematurely by your previous TEACH Grant servicer."

Prematurely. In multiple internal documents, the department and FedLoan describe these grants as having been converted "in error" or "incorrectly." In the letter to borrowers though, the conversions happened "prematurely," sending a message, intentionally or unintentionally, that these conversions were inevitable — not that borrowers may have been harmed and have recourse.

The letter goes on to outline some of the reasons these conversions would have been erroneous, including grants being converted before recipients graduated or within one year of their graduation. Three paragraphs in, the letter explains that, if the recipient is still on track with the program's teaching requirements, they can "request that we reinstate your TEACH Grants."

The last page of the three-page correspondence is the clearest: A form with the subheading "Request for TEACH Grant Reinstatement" required teachers who thought they had been wrongly converted to simply provide their name, account number and signature. Borrowers who had an email address on file also received one notification via email.

No recipients were called. No follow-up letters were sent. It's unclear whether there was any attempt to determine if the street or email addresses being used were current. An Education Department official tells NPR that the vast majority of people that FedLoan attempted to contact did not respond. Also, no attempt was made to contact borrowers who had already paid off these potentially erroneous loans if they did not initially contest the conversion of their grants.

In a statement, the Education Department tells NPR that it did its due diligence:

"In 2014, the Department detected anomalies in TEACH Grant conversion rates. In response, the Department requested a review of the loan servicer's administration of the TEACH Grant Program. The review revealed that nearly 11,000 recipients may have had their TEACH Grants converted to loans in error. The Department immediately developed a work plan to determine the root cause of the inadvertent conversions, communicated with potentially impacted recipients, validated who was actually impacted and when requested, corrected the error."

But Murray, of Public Citizen, says the department didn't do nearly enough and that she's not surprised so few people responded to FedLoan's outreach.

"[The Education Department] used this bland title that doesn't tell teachers what's really at stake in the letter, so they have to read multiple paragraphs to find out what happened and how they can fix it," Murray says. "It calls into question the Education Department's interest in actually fixing the problem for these teachers."

And this problem appears to be larger still. As NPR has previously reported, thousands more public school teachers who are meeting the program's service requirements also appear to have had their grants converted to loans because of minor mistakes in paperwork or deadlines narrowly missed. The department doesn't classify these grants as being converted "in error." Many teachers say these conversions are nevertheless unfair and have left them feeling devastated, both emotionally and financially.

"It's so unjust and wrong on all accounts," says Kaitlyn McCollum, a high school teacher in Columbia, Tenn. She says that in 2016, her fourth year teaching, she sent the required "annual certification" TEACH grant paperwork in on time but that FedLoan told her they received it a few days late. And for that, suddenly, her $16,000 in grants were converted to $22,000 in loans (including interest, which keeps adding up). By the time she's done paying the government back, it will have cost her $30,000.

McCollum and her husband are both teachers. They have a young family, and money is tight. And she says to be hit with so much debt has been crushing. It's "a myriad of emotions — anger, frustration, hopelessness, sadness, fear," she says. "All of those negative emotions kind of rolled into one."

The Education Department insists in a statement that it "is committed to improving this program, and is currently reviewing all aspects of its administration of the program to ensure that we provide students who want to teach in underserved communities the resources and support they need." The departmenthas also advised teachers to seek help through its student loan ombudsman's office.

But, even if the program is improved for future teachers, it's not clear what will happen to the many who are still stuck with big loans they shouldn't have to pay. Many teachers, including McCollum, say the TEACH grant serves an important purpose, and they hope — this time around — they'll get their money back and the department finally gets things right.

We have an update now of a story about a troubled federal grant program for public school teachers. It's supposed to help them. Many teachers have had grants unfairly converted to loans, leaving some of them with more than $20,000 in debt that they never expected. In recent weeks, 19 U.S. senators signed a letter to the education secretary, Betsy DeVos, citing NPR's reporting and saying, quote, "it is urgent that these mistakes are fixed."

DAVID GREENE, HOST:

Well, now we have learned that the problem is even bigger than we thought. The Education Department knew years ago that thousands of people had been hurt by this program, but the department did not help them. NPR's Chris Arnold and Cory Turner have the story.

CORY TURNER, BYLINE: This debacle began with the best of intentions. The TEACH grant program was created at the end of the George W. Bush administration to reward promising future teachers for agreeing to teach high-need subjects, like math, in low-income schools.

CHRIS ARNOLD, BYLINE: The reward was a grant, free money to help them pay for their own college or a master's degree. But the program has been mismanaged from the beginning, and a lot of teachers have had their grants unfairly taken away and turned into loans.

TURNER: It's like being given a gift for doing something good and then being told you have to pay for it.

KAITLYN MCCOLLUM: All right, guys. Can you team up for me? Get in your color groups. Awesome. Blue's good. Yellow's good. Orange is good.

TURNER: Kaitlyn McCollum is one of the teachers we've been following. She teaches high school in Columbia, Tenn. We caught up with her recently as she helped lead a troupe of school kids on a trip to Washington, D.C., and New York City.

MCCOLLUM: One of my students, I was absolutely thrilled when she said that Ellis Island was her favorite part of the trip.

ARNOLD: McCollum loves being a teacher, and she's doing what she said she'd do to keep her TEACH grants, teaching in a low-income school. But her grants were converted, anyway, into $22,000 in loans, money she now has to pay back. She says that's left her feeling really hurt by her own government.

MCCOLLUM: Anger. Frustration. Hopelessness. And, it's so unjust and wrong on all accounts.

TURNER: NPR's previous reporting found many teachers like McCollum have been unfairly hurt by this program, often because of minor issues with paperwork. If teachers send it in even a day late or missing a signature, it can trigger this catastrophic outcome where they owe all this money.

ARNOLD: That's sparked an internal review at the Department of Education, but now previously unreleased documents show that the mismanagement here is even worse than first thought. It turns out that the department has known about all this for years and done little to correct it.

TURNER: In 2014, the Obama administration ordered an audit of the TEACH grant program. It kept quiet about it, but we now know the results were remarkable.

JULIE MURRAY: More than 10,000 TEACH grant recipients had had their grants apparently converted to loans in error.

ARNOLD: Julie Murray is an attorney at Public Citizen Litigation Group. She unearthed this audit through a Freedom of Information request.

TURNER: As she said, the department was told that more than 10,000 people apparently had their grants converted to loans in error, based on mistakes made by the program.

ARNOLD: But these documents that Murray got, they didn't answer one pretty important question. We know how many people appear to have been hurt by this...

MURRAY: But from there, the trail went cold. It's been a mystery how many individuals had their grants converted back after this audit.

TURNER: In short, did the Education Department ever fix this? What happened to these more than 10,000 people? A group of U.S. senators wants to know that, too. They recently wrote the education secretary, demanding an answer.

ARNOLD: Well, now NPR has that answer, and it's not pretty. According to documents we obtained from the department, the vast majority of people flagged by this audit received no help.

TURNER: The department confirms that just 15 percent - that's one-five, 15 - had their loans changed back to grants. That means 9,000 people who didn't do anything wrong got no help at all.

MURRAY: Those numbers are appalling. It doesn't appear that the department undertook a really serious effort to reconvert these grants back.

TURNER: The Ed Department sent each person flagged by the audit one letter in the mail. Some also received an email.

ARNOLD: But they didn't just say, hey, look, we made a mistake and we want to give you your money back.

TURNER: Instead, the letter says, quote, "your TEACH grants may have been converted to loans prematurely."

ARNOLD: Prematurely.

TURNER: Which implies that losing your grants is kind of inevitable.

ARNOLD: And this one letter was your only chance. It was on you. You had to respond and say, please, give me my money back. But the whole thing wasn't spelled out very clearly, and the vast majority of people did not respond. In a statement, the Education Department tells NPR that it, quote, "communicated with potentially impacted recipients," and, quote, "when requested, corrected the error."

MURRAY: The department could have used an opt-out system. It could have contacted teachers and said that it and its servicer were going to reconvert these loans back to grants unless people didn't want them to.

ARNOLD: Again, these mistakes were made years ago, but now it's fallen to Education Secretary DeVos to fix things. Her department insists in a statement that it is, quote, "committed to improving this program."

TURNER: But even if this program is improved for future teachers, it's not clear what will happen to the many who are still stuck with big loans they shouldn't have to pay. Many teachers, including Kaitlyn McCollum, say the TEACH grant serves an important purpose, and they hope this time around they'll get their money back and the department finally gets things right. For NPR News, I'm Cory Turner.